Robson v Webb Bros Pty Ltd
[1998] IRCA 13
•08 April 1998
FOR GENERAL DISTRIBUTION
INDUSTRIAL RELATIONS COURT OF AUSTRALIA
TERMINATION OF EMPLOYMENT - alleged unlawful termination of employment - VALID REASON - not satisfied valid reason for termination of employment established after finding made of employment relationship established between applicant and respondent
EMPLOYMENT CONTRACT - SERVICES CONTRACT - applicant negotiated salary of himself and partner with Director of Respondent - Agreement to pay salary to Company owned by applicant and partner - indicia of employment examined - weekly invoices for sales consultancy fees - office expenses paid by employer - LEGAL REPRESENTATION - applicant appeared on behalf of himself and assisted partner in presenting case - LIQUOR LICENCE - application made for Liquor Licence to NSW Licensing Authorities - affidavit of applicant claiming to be employee - consent of Director of Respondent to application - SALES CONSULTANCY - sham agreement for sales consultancy to avoid employment relationship and take advantage of taxation situation of private company - To be referred for further investigation by State and Federal Authorities - WAGES - assessed to include weekly amount for value of company motor vehicle - CONDUCT AND PERFORMANCE - OPPORTUNITY TO RESPOND - No opportunity to respond to respond to allegation of poor sales performance - TERMINATION PAY - Award for failure to give required Period of Notice - DAMAGES - Compensation assessed on basis that respondent would be in position to validly terminate applicant for failure to achieve reasonable sales criteria within six weeks - PRACTICE AND PROCEDURE - EVIDENCE - Evidence Act, direction to applicant under section 128 to answer questions regarding his personal taxation returns and those of his Private Company - Certificate to be issued to applicant - SUMMARY DIMISSAL - Applicant terminated without reason or explanation - REINSTATEMENT - Impractical to reinstate applicant - certain level of sales to be expected from applicant - applicant failed to produce evidence that would achieve sales criteria in future - DIRECTION OF COURT - Reasons for judgment, exhibits and transcripts of evidence referred to the Attorney General of the Commonwealth to facilitate investigation by appropriate state and federal taxing authorities.
Workplace Relations Act (Cth) 1996 (formerly known as Industrial Relations Act 1988) ss 170DB, 170 DE(1), 170DC
Evidence Act (Cth) 1995 s.60, s.128(6)
Superannuation Guarantee (Administration Act) 1992 (Cth
Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16
Zuijs v Wirth Bros Pty Ltd (1955) 93 CLR 561
Federal Commissioner of Taxation v Barrett (1973) 129 CLR 395
Humberston v Northern Timber Mills (1949) 79 CLR 389
Queensland Stations Pty Ltd v Federal Commissioner of Taxation v Barrett (1945)70 CLR 539
Marshall v Whittaker’s Building Supply Co (1963) 109 CLR 210
Vabu Pty Ltd v Federal Commissioner of Taxation (1996) 33 ATR 537)
Ready Mixed Concrete (South East) Ltd v Minister of Pensions & National Insurance (1968) 2 QB 497 at 526
Bertram Daniel v Real Estate Network Pty Ltd (1996) 71 IR 437
Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449 at 454
Petera Pty Ltd v EAJ Pty Ltd (1985) 7 FCR 375
Simon Eric Imberger v Video Classique Pty Ltd (unreported IRCA decision No. 547/96 Millane JR
Selvachandran v Peteron Plastics Pty Ltd (1996) 62 IR 371
Gibson v Bostik Pty Ltd (1995) 60 IR 1
Perrin v Des Taylor Pty Ltd (1994) 58 IR 254 at 256-7
Liddell v Lembke (1994) t/a Cheryls Unisex Salon, 56 IR 447
Nicholson v Heaven & Earth Galleries Pty Ltd (1994) 1 IRCR 199
Sophie Caroline Lethern v Beresfield Pty Ltd t/a Titan Ford Brookvale (unreported IRCA decision dated 3 October, 1995 No. 542/95 McIlwaine JR)
ROBSON V WEBB BROS PTY LTD
NI 3371/95
MCILWAINE JR
SYDNEY
8 APRIL 1998
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NI 3371 of 1995
BETWEEN:
JOHN RONALD ROBSON
APPLICANTAND:
WEBB BROS PTY LTD
RESPONDENTJUDICIAL
REGISTRAR:
MCILWAINE
DATE OF ORDER:
8 APRIL 1998
WHERE MADE:
SYDNEY
MINUTES OF ORDER
The Court declares that:
The applicant was an employee of the respondent between 5 December 1994 and
4 August 1995.
The respondent has contravened section 170 DB of the act in that wages for one week were not paid in lieu of the period of notice required by the Act.
The Respondent has contravened Section 170 DC of the Act.
The respondent has contravened Section 170 DE(1) of the Act in that it did not have a valid reason for the termination of the employment of the Applicant on 4 August 1995.
It is impractical to reinstate the Applicant in any position with the Respondent.
It is appropriate to award compensation to the Applicant in the sum of Three Thousand Six Hundred Dollars ($3,600.00).
The Court orders that:
The Respondent pay to the applicant within twenty one days the amount of Six Hundred Dollars ($600.00).
The Respondent pay to the applicant within twenty-one days the amount of Three Thousand Six Hundred Dollars ($3,600.00).
Any sum paid within twenty one days to the Australian Taxation Office, which the respondent is obliged to pay on behalf of the applicant, or which can lawfully be made on his account, in respect of the sums ordered in paragraphs 7 & 8 shall be pro tanto satisfaction of the obligations of the Respondent under Orders 7 & 8.
The Court directs:
The District Registrar of the Federal Court of Australia, NSW District Registry, to forward to the Commonwealth Attorney-General a copy of these reasons for judgment and the evidence of the witnesses and to make available, as may be required, the full transcript of the proceeding and the exhibits for inspection by any officer authorised to inspect by the Commonwealth Attorney-General, the Commissioner of Taxation or by the Workcover Authority of New South Wales or Liquor Administration Board of NSW.
And the Court further orders that:
Upon application being made to the District Registrar of the NSW Registry the applicant is to have the benefit of a certificate issued pursuant to s. 128(6) of the Evidence Act, 1995. That part of his testimony which may be covered by the certificate is contained in pages 25 to 42 inclusive and page 54 of the transcript of the proceedings on 2 December 1996.
Liberty to both parties to apply as to the extent of coverage of the certificate ordered in paragraph 11.
Kate Benson
Legal Assistant to
Judicial Registrar McILwaine
FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NI 95/3371
BETWEEN:
JOHN RONALD ROBSON
APPLICANTAND:
WEBB BROS PTY LTD C/-OYSTER COVE WATERFRONT
RESPONDENT
JUDICIAL
REGISTRAR:
MCILWAINE
DATE:
8 APRIL 1998
PLACE:
SYDNEY
REASONS FOR JUDGMENT
APPLICATION
This is an application by John Ronald Robson claiming unlawful termination of his employment under Division 3 Part VIA of the Industrial Relations Act 1988,(“ the Act”), now known as the Workplace Relations Act 1996, against his alleged former employer, Webb Bros Pty Ltd (ACN 010709074).
The applicant, was 49 years of age, at the time of the trial and in his claim records the work performed for his employer as “manufactured home village”. The applicant suggests he started work with the respondent on 5 December 1994 and completed his employment on 4 August 1995.
The remedy sought by the applicant in his application was originally compensation. This was amended at the start of the hearing to include a claim for reinstatement. The application was filed in the registry of the court on 24 August 1995. There is no claim by the respondent that written notice was given to the applicant.
The respondent, Webb Bros Pty Ltd (ACN 010709074), which I will refer to in future as “Webb Bros Pty Ltd”, is a private company. Mr Brian Webb, a Director of the respondent Webb Bros Pty Ltd declared in the notice of employer’s appearance, that Budway Pty Ltd (ACN 003 989 179) (“Budway Pty Ltd”), was the true employer of the applicant. This notice was supported by a facsimile message dated 30 August 1995 addressed to the court as follows:
“Message,
Please note Webb Bros P/L is not the employer of these people.
Regards
Brian Webb”
The court has a certificate issued by Deputy President Drake of the Australian Industrial Relations Commission at Sydney dated 23 November 1995 in the following terms:
In accordance with subsection 170ED(2) of the Industrial Relations Act 1988, the Commission hereby certifies that it has been unable to settle this matter by conciliation, within a reasonable period.
There was no objection to the certificate made by either party. In addition, no issue was raised during the hearing as to the timing of the lodgment of the application. I therefore find the matter is properly before the Court.
This matter was heard in conjunction with the proceedings numbered NI3370/95
Julie Helen Olsen v Webb Bros Pty Ltd. Ms Julie Helen Olsen (“Ms Olsen”) is the partner of the applicant and a fellow Director of Budway Pty Ltd. Both applicants were unrepresented with Mr Robson providing the key speaking role throughout the proceedings. The decision in her case should be read in conjunction with this judgment.
BACKGROUND
The case revolves around a development known as “Oyster Cove Waterfront Village”at Yamba, New South Wales. The project involved the establishment of a site upon which individuals could construct up to 154 relocatable homes. In return for the payment of a rental for the site the owner of the home is given the use of the swimming pool, sporting facilities and a “Residents Club.”
Earlier attempts to develop the site had not been successful and this was a relatively new type of development. Apparently the Webb Bros had acquired this site from a receivership of another business which appears to have had a different purpose for the area possibly involving the promotion of conventions.
It is not in dispute that the applicant and Ms Olsen commenced their duties on 5th December 1994, and they were terminated on 4th August, 1995.
The job of the applicant was to market the homes supplied by the respondent and its associated companies, complete the sales and then to oversee and assist where possible the construction of the home on the allocated site. The homes were brought down from Brisbane in two separate parts and had to be joined on site, so local builders and tradespeople in Yamba were involved in the assembly process. Orders were prepared and signed by the applicant on behalf of the respondent to purchase goods and equipment where necessary to have the homes completed. There was also an administration section for the project located in an office on the development.
EVIDENCE OF THE APPLICANT
The applicant testified that he answered an advertisement dated 14th September, 1994 as follows:
“SALESPERSON
We require a mature Salesperson who has a pleasant personality and has the ability to communicate with the over 50’s. Wage negotiable.Please apply in writing to: The Manager
Oyster Cove
Waterfront Village
........ ........ ........ ....
........ ........ ........ ....”
He applied in writing for the position and was contacted by Mr Noel Newton who introduced himself as the Manager of Oyster Cove Waterfront Village, and arranged an interview with him. The position was explained as being a job for a salesperson to assist to sell manufactured homes and that the position of Manager may be available as Mr Newton was returning to Brisbane in the near future. Mr Newton pointed out that he was not in a position to make a determination as a director of the owner Mr Michael Webb would be the decision maker and this would require a second interview by him. The applicant was then taken on a visit around the display homes in an electric car by Mr Newton.
During the subsequent interview with Mr Michael Webb at the site, the applicant advised him that he was in a de-facto relationship and his partner Ms Olsen was employed by a large department store in Grafton, looking after the lay-by section. Mr Michael Webb then asked if Ms Olsen would be interested in working for the respondent by taking on the administrative side of the business which would mean they could then work as a team to complete sales of the homes. Mr Michael Webb also said that he would like to meet with Ms Olsen and discuss the proposal. Not long after there were several telephone conversations between the applicant and Mr Michael Webb regarding the position and the applicant visited the factory in Brisbane early in November 1995.
On this occasion there was a meeting with Brian and Michael Webb, in the office of Mr Brian Webb at Brendale, in Brisbane. There it was pointed out to the applicant that they were still interested in Ms Olsen looking after the administration side of the business. The applicant maintains that salary was never discussed, however it was pointed out that they were required to work from 8.30 am to 5.00 pm Monday to Friday and 10.00 am till 4.00 pm on Saturday and Sunday. The applicant was told about another employee of the company Mr Rex Zietsch who was paid a retainer, and they were to work in with him, on the basis that they would have days off to fit in with his availability.
Again the sale of the homes was discussed it being explained that a three year financial arrangement had been entered into with a Queensland financier with a view to completing the sale of all sites within this time. The applicant left Brisbane without any firm commitment about the job and then there were several discussions by telephone.
There was then a fourth interview at Brendale at which Ms Olsen presented a resume of herself and there was a discussion of her qualifications. Ms Olsen was introduced to Mr Peter Reid, the Manager of Castle Cove Villages, (also called “Metalway”), who showed her around the factory and described the various stages involved in the construction of the homes.
The applicant and Mr Michael Webb negotiated the salary between them. A figure of $1,000 per week was eventually agreed on, however, after more discussion this figure was reduced to $900 per week in return for the supply of a motor vehicle. The applicant explained that the make up of the thousand dollars was based on a calculation by Ms Olsen and himself of $600 per week for services provided by the applicant and $400 per week allocated for the work to be done by Ms Olsen. The applicant testified that the figures were gross figures.
The applicant said he was asked by Mr Michael Webb whether he owned a company. He answered, “Yes, we do” and told Mr Michael Webb of the name of the company: “Budway.” Mr Michael Webb asked whether it was trading or not. The applicant said it was currently used for the agistment of cattle at MacLean, where they had 1000 acres. Previously, it had been used for a Florist business, which had been run by the two applicants at an earlier time. It was also pointed out that they sold the florist business on 21st September, 1979, and the company was not active. The applicant maintained it was suggested by Mr Michael Webb that it would be preferable if the company could be invoiced for their salaries. Mr Michael Webb said “we need you to invoice us, as we do it that way”. The applicant replied that: “he didn’t see any problem with that suggestion”. In the evidence of the applicant it was suggested that Mr Brian Webb and Ms Julie Olsen were in a separate discussion at that time and were not party to that conversation. This claim is supported by Mr Michael Webb and Miss Olsen.
It was agreed that they should start as soon as possible. With that in mind Ms Olsen said that she had to give notice and she informed the two brothers that it would be necessary for her to call back with a definite date for commencement. Subsequently, it was agreed that they could start on 5 December 1994, although the letter dated 22 November 1994 (Exhibit 3) suggests a commencement date of 14 December 1994 as a guide.
Accordingly they went to the site office on 5 December 1994 to be met by Mr Brian Webb, who introduced them to the Accountant from the Brisbane office. The Accountant showed Ms Olsen through the accounting system while Mr Brian Webb went through the Sales Office details with the applicant. They also met Mr Mick Duke who was a foreman with the company, who instructed them on what to do when the houses arrived. The applicant was informed that Mr Newton had returned to Brisbane on 1 December 1994 and the Secretary of the organisation had left on the previous Thursday or Friday.
The Ford Fairlane Fairmont, previously driven by Mr Brian Webb, was made available to them on the same day. The uniform shirts and jumpers which are exhibits in the proceedings were supplied by post. In addition business cards were paid for by the Respondent. At the site office at Oyster Cove, there were facsimile machines, mobile phones, stationery all of which were endorsed with the name “Oyster Cove Waterfront Village.” The applicant maintained that they had no expenses whatsoever, as everything was done through the office. This claim appears justified as no evidence was led from the Respondent to contradict this assertion.
After the commencement of their engagement, each day, they opened up the Residents Club as well as the Display homes and discussed with the maintenance people, and the two groundsmen what needed to be done on site and then issued any necessary orders for repairs or equipment. There were daily discussions with the Brisbane office about their work. Ninety per cent of these conversations were with Mr Michael Webb who provided marketing and sales advice whilst occasionally they spoke with Mr Brian Webb or Mr Peter Reid. Later on the applicant says he was informed that Mr Peter Reid was their manager. This claim was denied by the Respondent on the basis that Mr Peter Reid was not an employee of the respondent.
The applicant further testified that all the day to day expenses were paid by the respondent and not one item was paid by “Budway Pty Ltd.” He gave no evidence of any losses sustained by Budway Pty Ltd during this period or upon termination. He maintained that there were no complaints made to him prior to the dismissal about the running of the site. Some time prior to the dismissal they had a first year anniversary party which Ms Olsen arranged. A video recording of this event showing Mr Michael Webb and others speaking to the gathering was presented to the court.
VIDEO EVIDENCE
A video recording was tendered in evidence on behalf of the respondent and Mr Michael Webb maintained that the speech at the function occurred on 27th July, 1996.
The video shows a date of 18th January 1996 at 13.22 hours. This is obviously a reproduction as the original filming was done by a resident. Neither side disputed the contents of the recording. The video commenced by panning across the site showing the Residents Club, Sports Centre and the tennis courts. It then records the gathering for the anniversary party.
The reason for this function was described by Mr Michael Webb in his opening address of welcome:
“I would like to pay a tribute to the workers that we’ve got, the Sports centre and the positiveness that is, is occurring over there is, is just something that you ride on. There’s just a hell of a lot of enthusiasm in the whole place. I would like to pay a tribute to the work that has been done by the people in the sports centre. I would like to pay a tribute to John and Julie for the work that they have done.
Our numbers, our housing numbers are a little down at the moment but that’s just down on our forecast.
The main idea, the main point is of me sort of making this small, talk here is to make a presentation here to some of the residents who have recently occupied the Cove. So what I would like to do is ask these residents to come forward to receive our certificate of a seven year guarantee on the house together with a couple of T-shirts..”
In addition to the reference made by Mr Michael Webb about the applicant and Ms Olsen there are three positive comments by a resident and the President of the Residents Club.
Thelma: John and Julie and Peter and Tom and all the people who work here have been so helpful - I’d certainly recommend it to anybody who is contemplating the move to Yamba.
Michael Webb: Don is the president of the residents club.
Club President: I would also like to thank John and Julie, John Robson and Julie for the effort they’ve put in and the co-operation that they have shown as far as their short time here really.
The Webb Brothers and your representative down here - John and Julie - we thank you very much!
. . .
The address by a local dignitary, probably the Mayor or local Councillor gives an insight into what appears to have been a difficult background to the site.
Mayor: And certainly this building we are standing in now has been transformed from what it was originally designed as a convention centre, to a club for those residents.
. . .
On the other hand one of the residents testifies to the quality of the site.
Max: “and to me this is the best one that I have found in the whole of Australia, and as far as I am concerned this is the best one of the lot and the workmanship and the materials that are used as far as I am concerned is first class.”
. . .
Section 60 of the Evidence Act 1995 (Cth). allows the court to take into account the contents of this video in assessing the key question as to whether the applicant and Ms Olsen were employees even though it was tendered by the respondent for the purpose of rebutting the specific claim by the applicant that their work had been praised by Mr Michael Webb in his remarks to the gathering. The video does tend to show that the claim by the applicant was exaggerated. However it also amply demonstrates a failure by the representative of the respondent to take the opportunity to point out that the applicant and Ms Olsen were simply part of a sales consultancy and were not employees.
The silence of Mr Michael Webb is deafening as he does not say anything to correct the misrepresentation that they were employees or which disturbs the myth created by the uniforms and other indicia that in dealing with “John and Julie” the residents were dealing directly with employees of the owner of the sites of their new homes and not some unknown entity called Budway Pty Ltd. No written evidence was tendered by the respondent as to any sales being completed by Budway Pty Ltd or on the behalf of that company by the applicant and Ms Olsen.
METHOD OF PAYMENT
Tendered in evidence by the applicant were pages numbered from 55 to 87 of an ordinary style invoice book. Generally, the description on the invoice was as follows:-
“55
19/12/94WEBB BROS PTY LTD
Consultant Fee
4 WEEKS CONSULTANTADVISE
J. Robson
J. Olsen $900/week
$3,600
5/12/94 - 1/1/95Three thousand six hundred dollars Total $3,600”
The duplicate copy of Invoice No. 56 dated 15 January 1995 as follows :-
“ 56
15/1/95
WEBB BROS PTY LTD
BRISBANE
Consultant Fees
2 WEEKS ADVISE
J.ROBSON
J.OLSEN $900/week
$1,800
2/1/95 - 15/1/94
$1,800”
This Invoice also contains the notation cancelled. It was replaced by invoice:
57
15/1/95
WEBB BROS PTY LTD
BRISBANECONSULTANTS FEES
1 WEEK SALES & MARKETING ADVISE
J.ROBSON
J. OLSEN $900
2.1.95 TO 8.1.95
$900
Thereafter invoices were issued in a similar fashion on a weekly basis right through until invoice number 78, dated 1/6/95. Occasionally, the wording varied, however, the weekly amount of $900 remained the same until Invoice No. 79 dated 8 June 1995.
Because the arrangment for commission was not generating any additional income the applicant sought an increase in the weekly payments. This was acceded to by the respondent and from Invoice No. 79 to 86 the amount claimed was increased to $1100. The final invoice was numbered 87 and claimed payment from “31st July - 6th August”. It was dated “3/8/95” and was apparently issued before the termination on 4 August 1995. These invoices were paid by cheque issued on behalf of the respondent by its Brisbane office.
LIQUOR LICENCE
The applicant suggested to Mr Michael Webb that he would like to sell liquor on the premises occupied by the Residents Club. In his discussion with Mr Michael Webb he told him that he had previously done a Hotel Catering Course at Ryde College of TAFE in 1975 which would qualify him for the issue of a licence. As a result of this discussion the applicant said he applied for a catering licence for the Residents Club.
With the consent of Mr Michael Webb, the applicant engaged a solicitor, and applied for the necessary licence signing as an employee of the company. The applicant maintains that this was the only way in which he could get the catering licence. I find that it is highly likely that this application was completed with the knowledge and consent of Mr Michael Webb as a director of the respondent and probably with his encouragement. At the time of completion of the application Mr Michael Webb as a Director of the Respondent was party to a false arrangement with the applicant which sought to describe the applicant and Ms Olsen as other than employees of the respondent.
Mr Michael Webb denied that he had been told by the applicant in relation to the liquor licence application that the applicant had to be shown as an employee of Webb Bros Pty Ltd. In his evidence which he confirmed that the applicant had told him that he had successfully completed an examination as this was a requirement to enable the application to be made for a license. I am inclined not to accept the answers given by Mr Michael Webb which suggest he knew little about the application for a liquor licence, as it was apparent on the face of the document that dates of birth in relation to the directors of the company had been included on the document.
Mr Michael Webb explained in his testimony that, the accountant would have this information or that it was otherwise freely available to the applicant. In accordance with the usual personnel practices it would be unlikely that the accountant would make such information available, to the applicant, without the consent or knowledge of either or both of the Webb brothers.
SALES
The letter dated 22 November 1994, (Exhibit 3) anticipated: “that a minimum of 25 homes be sold and settled by Budway and other agents in 6 month period 15th December, 1994 to 15 June, 1995.” The applicant turned out not to be a highly successful salesman. Only six homes were sold during the period of their engagement. However he maintained there were a further 16 deposits taken which were subject to purchasers being able to sell ‘their own home’. This form of sale does not fall within the scope of the sales criteria set out in that letter.
Apart from this the applicant said that the village was relatively happy and on two occasions he had visited Sydney and Melbourne to look into the retirement experience. On one occasion he had gone accompanied by Mr Michael Webb to a Retirement Expo, and the company had paid his expenses and these had been reimbursed by cheque. This evidence was not challenged by the Respondent.
EVIDENCE OF RESPONDENT
Mr Michael George Webb, a Director of Webb Bros Pty Ltd, gave evidence on behalf of the company. He advised the court that he was a co-owner of the company with his brother Brian and was one of the two directors. The company purchased a manufactured home park called Oyster Cover Waterfront Village and that was its primary business. Prior to December 1994 the work of promoting and selling houses was done by Metalway Pty Ltd. Metalway Pty Ltd was the company which had manufactured the homes and initially it was engaged to do the marketing of the homes and it employed Mr Noel Newton and Mrs Shirley Colrough.
Mr Newton was involved with taking sales, making sales calls from the Oyster Cove office and taking people around, who enquired, in an electric buggy. He performed a general liaison role with residents, and with the Sports Centre. Mrs Colrough was involved in administration duties and provided backup to Mr Noel Newton. Mr Michael Webb maintained that Webb Bros Pty Ltd did not have any say in the marketing of the homes by Metalway Pty Ltd.
Mr Webb agreed that the advertisement, (Exhibit 1), was approved by him and a number of replies were received. Mr Noel Newton interviewed those persons, recommending five people on a short list for interview. Mr Webb in his evidence confirmed the information which was provided by way of background material by the applicant. Asked by his counsel:
“Well, what did you tell him actually?” He replied: “I would say - I can’t remember every word that I would have said but I would have said that he would be required to do calls. We would provide marketing assistance that my company that I have in Mackay has, is able, and has the ability to produce promotional literature. And what is that company called? NQBE in Mackay and we can create coloured desktop publishing leaflets and coloured posters and various forms of marketing assistance. And I told him that I am currently assisting Metalway and Noel Newton in doing it, and I would continue that with John Robson, or whoever I was to employ.” (my emphasis)
Mr Webb testified that he had interviewed a number of other impressive people and had subsequently spoken to the applicant on the phone and asked him to go to the factory to see the houses as they were being manufactured, and have a meeting with his brother Brian. Mr Michael Webb maintained that he was not at this interview which involved his brother Brian. This evidence is at variance with that of the applicant. However, in the light of the subsequent evidence and the failure of Mr Brian Webb to give evidence nothing of any substance turns on the issue.
The version given by Mr Michael Webb then suggests that, a week later after the visit to the factory, he had rung the applicant, and told him he had not come over well in the discussion, and that they were preferring other people. He also maintained that in the course of the interview, he said he was quite impressed by the references the applicant had made to Ms Olsen, and he testified,
“And I said ‘ You may wish to speak to her, and she might - you both might like to make a joint application to us in Brisbane, and you speak to her and get back to me.”
Mr Michael Webb maintained that he had called the applicant on a number of occasions, speaking with his mother, on one occasion, and was unable to make contact. In one conversation he reported he pointed out to the applicant that he had to show a lot more enthusiasm about the position and that there was a necessity for a joint submission involving both applicants. It was agreed after this occasion that the both of them would come up to Brisbane and that the interview would be conducted at Brendale.
Both the applicant, and Mr Michael Webb confirm the evidence of Ms Olsen, that she had been shown around the factory by his brother Brian, and that they had been introduced to Mr Peter Reid and possibly a Mr Mick Duke.
Questioned about the terms of the engagement initially Mr Michael Webb made the following response:
“Well can you tell us what was discussed in terms of the - what you wanted from the arrangement? ---Well , I am in the habit of, when I employ people I take notes. And from those notes I write letters to those people confirming what I have said. So that they have a clear understanding of what was discussed and what I understood their duties to be. So that the letter that we raised after they left confirming their appointment, was an absolute replica of - to a point of what was discussed in that interview.”
However, Mr Webb immediately qualified this evidence, by saying he doesn’t keep the notes:
“ as they are just personal sort of reminders of the points that I have raised.”
Mr Webb also concluded, that in his view, Ms Olsen had much more ability in marketing and communication, particularly to retirees, than had the applicant. He also confirmed the evidence of the two applicants as to how the amount of $900 was agreed between the parties. He also conceded that the applicant was the person who was present and represented Ms Olsen in the negotiations on behalf of the two applicants.
Asked to explain how did ‘Budway Pty Ltd’ come into the arrangement by counsel for the Respondent, Mr Michael Webb replied:
“Well, I was aware that Budway was in existence, or a company was - I didn’t know whether it was called Budway, but that a company was in existence. And it came to a stage when we agreed at a figure of $900 per week, I asked John how he would like to have that paid. And he said, well, we have this existing company, ‘Budway,’ and I took down the details, and I wrote down Budway Pty Ltd. And that’s how I was able to even write this letter of confirmation of our discussion.”
Asked whether he suggested the monies be paid to Budwa;y Pty Ltd, Mr Michael Webb answered as follows :
“ Not at all, I asked him how he would like to have them paid? That seemed legitimate to me. We’d previously been engaging a Proprietary Limited Company and seemed legitimate to me - It was different to the way in which we had originally applied - put an advertisement in the paper, but that was going down a completely different road, and he was told that he had not come across well in that interview process and we had preferred other people. So, I don’t know of any more kinder way to tell someone that he was not going to get the job.”
In attempting to extricate himself from the difficulties about the employment situation of the applicant, it appears to me that in his evidence Mr Michael Webb has improved the position of Ms Olsen when this exchange occurred with counsel for the respondent:
“So you have come into a different arrangement? “ “Yes, we had agreed on a different arrangement where I at no time, did I ever say one has to do this duty. In fact, I made every possible encouragement in the interview for them to share their duties because I could see that I needed Julie out there talking to the people.”
He also suggested that the fourth meeting took about two hours, although he would not contest the three hour estimate of the applicant and Ms Olsen.
During the course of his evidence, Mr Webb made an allegation that the applicants abandoned their employment for a short period to take a trip to Sydney. However this allegation is not of much help to the court because the applicants were not given the opportunity of responding to the suggestion during their evidence. Some of the other allegations made in his evidence were also not put in cross examination to the applicant. This may have been due to the reliance on the employment issue as the main defence to the action.
Although Mr Michael Webb denies that there was daily contact with the applicants about the work situation he does concede in his evidence, that there was regular contact at least every few days. Although disputing the claim of the applicants that Mr Peter Reid was to be their Manager, Mr Michael Webb, in his evidence, disclosed that Mr Reid would often take enquiries about the homes from people in Brisbane, and sometimes they would be sent down to see the applicant, or at other times Mr Reid would accompany them. Furthermore Mr Michael Webb concedes that he told both of the applicants that they should listen to Mr Reid, because he (Mr Michael Webb), was impressed by some of the things he has achieved and his marketing expertise.
Following the termination of the applicant and Ms Olsen the company was successful in rearranging its operations so they were able to obtain a person at the cost of $700, being $500 advance commissions and $200 in wages. The administration of the centre being handled by a person coming down from Brisbane two days per week.
Ms Linnane, counsel for the respondent obtained in favour of Mr Michael Webb that he employed 24 people at his business NQBE Services Pty Ltd in Mackay, and that they paid income tax for those persons and workers compensation premiums, superannuation and annual leave. All of which were not paid in respect of the applicant and Ms Olsen in this enterprise.
SALES CONSULTANCY
Mr Webb denied that he had given any orders as to how the work was to be carried out apart from what was recorded in the letter dated 22 November, 1994 (Exhibit 3) setting out the terms of the alleged consultancy:
“OYSTER COVE ........ .....
WATERFRONT VILLAGE ........ ......
........ .......
........ ........ ...
YAMBA
____________________________________________________________________
22nd November, 1994
Att: Mr John Robson/Ms Julie Olsen
The Directors
Budway Pty Ltd
........ ........ ........ ........ ........ .
........ ........ ........ ........ ........ .
--------------------------------------------CONFIDENTIAL-----------------------------------
Re: Consultants for Oyster Cove Waterfront Village
Dear John and Julie
This is to confirm details as was agreed in our meeting of 18th November, 1994 at Castle Cottages, Brisbane.
Consulting Fees
- Budway Pty Ltd will receive consulting free (sic) of $900 per week plus a ‘basic’ company car.
- Sales bonus paid after six (6) months as follows:
I) House Sales 1-10 in 6 months ........ ........ ........ ...... Nil Bonus
(Includes houses sold by other sub-agents and does not include contracts sold by previous employees)
ii) House Sales 10 plus in 6 months
A marketing fee $2,000 has been allocated in the sale of each home. The consultant who handles the sale from first contact to completion receives the full $2,000. When the work is shared with other sub-agents or real estate agents the $2,000 fee is split between and agreed by both parties. As a guide $200 is paid for a referred name; $500 is paid to sub-agents for an appointment; $1,000 is paid to an established group of ‘real estate sub-agents who also assist in the sale of the person’s property; $1,000 or $1,500 is paid to the agent who works from Oyster Cove Sales Office and who also needs your assistance in completion of the sale. For each sale over ten (10) in a 6 month period, Budway Pty Ltd will be paid the related bonus, depending on their involvement and as agreed beforehand with the other party.
2. Sales Target
It is expected that a minimum of 25 homes be sold and settled by Budway and other agents in a 6 month period - 15th December, 1994 to 15th June, 1995.
3. Possibility of Marketing by Negative Gearing/Investment Seminars
In 1995 Webb Bros Pty Ltd may also consider engaging a firm of Gold Coast based consultants to assist in a different form of marketing houses outside the area. Budway Pty Ltd will be included in this discussion. The expected sales targets in (2) above do not include sales from these ‘Investment Seminars’.
4. Duties and Responsibilities Summary
Budway Pty Ltd to provide:
- Sales Management seven(7) days per week.
- All administration for the Village and the Sports Centre. One person from Budway will be authorised to sign cheques to a limited value.
- Co-ordinator with local contractors.
- Represent Webb Bros Pty Ltd in the area, liaise with media, councils, deal with existing residents.
- Co-ordinate activities and functions in Residents Club and negotiate on our behalf.
- Co-ordinate with maintenance and other employees.You should be aware that your main focus is to market houses. You should be constantly aiming at improving efficiencies in time management during a day so that more daily time is spent on sales and creative ‘follow up’ of interested prospects.
5. Monthly Reporting
A monthly report is to be sent to Webb Bros Pty detailing prospect management, forecasts for next month, marketing actions for next month, general recommendations and advice.
The results of all agreed advertising and promotions is to be closely monitored for effectiveness.
6. Current Procedures and Training
All initial training will be provided by Webb Bros’ staff. As with all new positions, the first few months will be the most difficult - learning the industry, procedures, handling objections, etc. Final arrangements and exact commencement date will be confirmed to you shortly (14th December, 1994 is a guide start date).
7. Review
After six (6) months we will review the success of our relationship.
8. General Comments
On commencement you will receive a very ‘healthy’ list of 500 plus enquires (sic) with over 90 prospects asking to view our Video, being completed by the 30th November, 1994.
We believe that large road signs, currently being placed on the Pacific Highway are also certain to increase the rate of walk in enquiry.
Congratulations! We realise you have both agreed to a very concentrated effort, particularly in the next twelve (12) months - at which time we believe (and hope) you have established a successful, long term relationship consulting to Webb Bros Pty Ltd. You will receive every support from Brian and I and you are free to call us anytime for our advice or direction.
We are looking forward to a very exciting year ahead.
Yours faithfully
(Signed)
MG Webb
CO-OWNERFor our records, our contact telephone numbers are as follows:-
Mike & Irene Webb Brian and Greta Webb
Work ........ ........ ..... Work ........ ........ ......Home ........ ........ .... Home ........ ........ .....
“
(Note: The letterhead also included the following endorsement: “OYSTER COVE WATERFRONT VILLAGE IS A WEBB BROS. PTY.LTD. (ACN 010 709 074) DEVELOPMENT.”)
Paragraph 4 amply sets out the duties and responsibilities of a position, that in my view applies equally to the applicant and Ms Olsen as employees. There is a much larger degree of control outlined in the document than would be anticipated in the case of a normal consultancy. The requirement, that “one person from “Budway” will be authorised to sign cheques to a limited value” shows a degree of control which would not normally be the case in relation to a true sales consultancy. A consultant would be expected to pay expenses out of its own funds subject, of course, to taking the risk that it may not be reimbursed in the case of a dispute. Other aspects of the agreement which raise concern, from the point of view as to whether it was a true consultancy, is the concept contained under paragraph 1. (ii) that other Real Estate Agents may be involved in splitting the fees.
It seems probably the letter follows a standard letter that is often used as a basis for a letter of employment as an employee. A careful reading of the document in paragraph 6 reveals the use of the phrase “as with all new positions.” “Position” is defined in the Macquarie Dictionary to include: “a post of employment.”
It appears likely, having regard to the use of such phrases, that the standard document has been changed to refer to the sales consultancy. In addition, in paragraph 7 reference is made to reviewing: “the success of our relationship” which equally applies to an employment situation as well as a consultancy. The overall impression gained from the letter is that it is an adaption of a standard form letter of employment.
The other issue which leads me to conclude the arrangement is a sham, inter alia, to avoid the employment provisions of the Act is the fact that in his evidence, the respondent uses the word “employ” whereas he would be more likely to use words such as to “engage” or “secure the services” if it had been a true consultancy. It seems quite likely that if the respondent really wanted a sales consultancy it would have adopted a limited tender process and no doubt some of the local Real Estate Agencies would have been in a position to put forward a proposition to the respondent, which included managing the complex as well as selling the homes.
TERMINATION
On the 4th August, 1995 Mr Brian Webb walked into the office at Oyster Cove and commenced with some small talk about the business generally, its sales and deposits, and then said words to this effect: “Got some bad news your services are no longer required. I would like you and Julie to leave the village as soon as possible.” In addition Mr Brian Webb said he had employed: “a new hotshot, Salesman who would be taking over that week.” At this stage Ms Olsen walked in and the applicant said: “Brian’s got some bad news - they no longer require our employment and we have to be out of the village with the least delay.” They then picked up their personal items; such as her handbag, a clock and some banking documents and walked out. On the way out they mentioned they would bring the car back shortly. Later on they dropped the car off and Ms Olsen asked for a letter of termination and employment separation certificate from the Brisbane office. This was refused by the female clerk in that office.
Although he was present for most of the hearing Mr Brian Webb had left the court room at some time before the conclusion of the evidence given by his brother Michael. Mr Brian Webb was, as far as could be observed, no longer in the precinct of the court when Mr Michael Webb concluded his evidence. The applicant expressed interest in asking questions of Mr Brian Webb. It was explained to the applicant, inter alia, that in the absence of any agreement between the parties it would be necessary to issue a subpoena to compel Mr Brian Webb to give evidence. The applicant did not pursue this request any further. Consequently, the version given by the applicant and Ms Olsen as to the circumstances of the termination are unchallenged by the respondent.
DIRECTION UNDER S. 128 EVIDENCE ACT 1995
During the evidence of the applicant and after his objection I directed under s.128 Evidence Act, 1995, that the applicant answer questions from Ms Linnane, Counsel for the Respondent, regarding his taxation returns and those of Budway Pty Ltd. I accept that it was important to the case for the respondent to obtain a proper analysis of the financial arrangement between the parties. This direction was given as I was satisfied that it was in the interests of justice that he be directed to answer. The applicant is entitled to the protection afforded by the section and he may apply to the registry of the court for a certificate to be issued. That part of his testimony which may be covered by the certificate is contained in pages 25 to 42 inclusive and page 54 of the transcript of the proceedings on 2 December 1996.
CREDIT OF MALE WITNESSES
Not a lot turns on credit in this case as to a large extent both men have given similar versions of the events. I must say that, despite Mr Michael Webb giving the impression he was on top of his business, he was less than frank with the Court about how and why the sales consultancy document was arranged and completed. Mr Michael Webb gave very considered answers when responding to questions. I am satisfied that the long pauses were for the purpose of ensuring that he got his story right in relation to the purported sales consultancy arrangement. This, in the context of the proceeding, was not of little consequence.
WAS THE APPLICANT AN EMPLOYEE?
The method of determining whether or not a person is an employee of another has been set out concisely by the High Court in Stevens v Brodribb Sawmilling Co. Pty Ltd (1986) 160 CLR 16. Reference is made to the following passage from the judgment of Mason J, at page 24 of the report.
“A prominent factor in determining the nature of the relationship between a person who engages another to perform work and the person so engaged is the degree of control which the former can exercise over the latter. It has been held, however, that the importance of control lies not so much in its actual exercise, although clearly that is relevant, as in the right of the employer to exercise it: Zuis v Wirth Bros. Pty Ltd. (30); Federal Commissioner of Taxation v Barrett (31); Humberstone v Northern Timber Mills (32). In the last-mentioned case Dixon J. said:
“The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter’s order and directions.”
But the existence of control, whilst significant, is not the sole criterion by which to gauge whether a relationship is one of employment. The approach of this Court has been to regard it merely as one of a number of indicia which must be considered in the determination of that question: Queensland Stations Pty Ltd v Federal Commissioner of Taxation v Barrett (34); Marshall v Whittaker’s Building Supply Co. (35).
“Other relevant matters include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax and the delegation of work by the putative employee”.
In Vabu Pty Ltd v Federal Commissioner of Taxation (1996) 33 ATR 537 the NSW Court of Appeal again, considered the situation as to whether couriers were independent contractors rather than employees, and therefore outside the scope of the Superannuation Guarantee (Administration Act) 1992 (Cth).
The leading judgment of Meagher JA at page 538 points out, “ While it is also never an easy task to decide whether a given person is an employer or an independent contractor, there is no doubt as to what the legal tests are. The old test of ‘control’ is now superseded by something more flexible. This is made clear by the judgment of Mason CJ, in Stevens v Brodribb Sawmilling Company Pty Ltd, (1986) 160 CLR 16, and the earlier judgment of Dixon J in Queensland Stations Pty Ltd v FCT (1945) 70/CLR 539.
Meagher JA, then outlined the considerable measure of control which the company had over the couriers and continued:
“The cumulative effect of these conditions certainly gives the company a deal of control over its courier. However, a person may supervise others without becoming their employer.” There are several considerations which make me think that on balance the couriers are not employees. “ In the first place, they supply their own vehicles. (be they bicycles, motor-bikes, cars, utilities or vans). They have to bear the expense of providing for and maintaining these vehicles: they pay for running repairs, petrol, insurance and registration. The company provides telephones, uniforms and signage. The couriers’ expenses are very considerable.
To quote McKenna J in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance(1968) 2 QB 497 at 526:
“the ownership of the assets, the chance of profit and the risk of loss in the business of carriage are his and not the company’s”, . . .
by a consideration which points to the couriers being independent contractors.”
An additional indication is relied on by Meagher JA at page 539.
“Another very important indicium is that the couriers receive no wage or salary. Normally, if they were true employees, one would expect a certain sum to be paid each day, week or month. The company’s documents provide for no such thing. They are paid a prescribed rate for the number of successful deliveries they make.”
The position of the courier drivers in the Vabu case and the applicants in this case is quite different. There is no evidence before me at any stage of the investment by ‘Budway Pty Ltd’,
of any assets which could result in a risk of loss to the company, apart from the termination of the working arrangements of the two directors. In her submissions much was made, by Ms Linnane, Counsel for the Respondent, of the way the remuneration was being paid to ‘Budway Pty Ltd.’ It was submitted that this was an indicia of an independent contractor. However, when a careful examination is made of what has been said by Meagher JA, he shows an emphasis towards whether or not there was a weekly payment made to the couriers. In this matter it is without doubt that a weekly payment was made to the applicants whereas such payments were not made in Vabu.
It is true that the tax returns, as submitted to me by Ms Linnane, show that there are some discrepancies between the income and the expenses claimed by Budway Pty Ltd in those returns. However, there is no evidence from the respondent company, that any of these expenses were related to its business.
I cannot accept the submission of Ms Linnane that there was no obligation to work. It is quite clear to me that there was a large amount of control exercised by both Mr Brian Webb, and Mr Michael Webb, in the way the applicants went about their jobs. I am satisfied that there was a contract of personal services. The mere fact that the weekly wages were diverted to a company with the consent of all parties, so that personal income taxation was not deducted by the respondent, is not a sufficient ground to justify a decision that they were not employees. This one factor is outweighed by the other issues as previously outlined.
I am satisfied that payments were made to Budway Pty Ltd in lieu of recording those payments as wages or salary to which ‘PAYE’ taxation would be applicable on behalf of the applicant.
In this matter I agree with the general observations of Millane JR in Bertram Daniel v Real Estate Network Pty Ltd (1996) 71 IR 437, the relevant parts of which are extracted:
“In making this observation I have borne in mind Justice Lockhart’s description of this term in Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449 at 454 where he said:
“A ‘sham’ is therefore, for the purposes of Australian law, something that is intended to be mistaken for something else or that it not really what it purports to be. It is a spurious imitation, a counterfeit, a disguise or a false front. It is not genuine or true, but something made in imitation of something else or made to appear to be something which it is not. It is something which is false or deceptive.”
. . .
In the course of the hearing the Court drew to the parties’ attention the obligation it has to protect the revenue of the Commonwealth (see the discussion of this matter by Wilcox J (as he then was) in Petera Pty Ltd v EAJ Pty Ltd (1985) 7 FCR 375).
. . .It follows from my finding that the applicant’s true wages were the sum of the two amounts paid to the applicant and his wife and my finding that the purpose of the arrangement was to reduce the incidence of taxation payable by the applicant on the income actually earned from his employment with the respondent, that this is a matter requiring the Court to take whatever steps are necessary to ensure that the revenue of the Commonwealth is protected. Accordingly, I propose to direct the District Registrar of the Court to forward to the Attorney-General a copy of these reasons for judgment and the evidence of the three witnesses and to make available, as may be required, the full transcript of the proceeding and the exhibits for inspection by any officer authorised to inspect by the Attorney-General or by the Commissioner of Taxation.”
(See also the discussion in Simon Eric Imberger v Video Clasique Pty Ltd (ACN 006 375 284) an unreported IRCA decision No. 547/96 Millane JR).
Whether either party to these transactions has properly accounted for them is not a matter for this court to determine, I propose to adapt the direction given by Millane JR in Daniel (supra). The intention being that the State authorities are also entitled to investigate whether there has been a failure to fully disclose the wages bill for the purpose of avoiding such liabilities as Workcover premiums. In addition the evidence regarding the attempt to mislead the Liquor Licensing Authorities should also be brought to attention. This should be a factor which needs to be considered by such authority should the applicant or the representative of the respondent who gave evidence in these proceedings seek the privilege of obtaining such a licence in the future.
Accordingly, I propose to direct the District Registrar of the court to forward to the Attorney-General a copy of these reasons for judgment and the evidence of the witnesses and to make available, may be required, the full transcript of the proceeding and the exhibits for inspection by any officer authorised by the Attorney-General, the Commissioner for Taxation, the Workcover Authority of New South Wales or the Liquor Administration Board of New South Wales.
CONCLUSION
I am satisfied that given the wording of the initial advertisement together with the way the interviews proceeded that this was a in fact a contract of employment. The respondent had a viable alternative it could have readvertised and sought tenders from properly licensed Real Estate Agencies, to provide the sales consultancy service that has now been put forward, to the court as an explanation as to why there should be no contract of employment. I have no doubt that it was intended to establish an employment relationship. It should not be forgotten that the respondent could no longer rely on the employees of Metalway Pty Ltd to do the job.
There was an agreement between the applicant and the respondent to pay the wages to a different entity I am satisfied on the balance of probabilities that this agreement was entered into as a sham arrangement. The advantage to the applicant was that he would be able to take into account in his financial affairs, particularly for personal income taxation purposes, existing losses in the company ‘Budway Pty Ltd’.
It also suited Mr Michael Webb in that his real intention was to secure the services of Ms Olsen. It was unlikely that this could be achieved without the involvement of the applicant. I am satisfied there may have been some other financial advantage to the respondent in entering into this sham arrangement. In addition to the obvious savings to the respondent of not having to pay annual leave, workers compensation premiums and superannuation there was the possibility of obtaining the services of Ms Olsen at a rate which was less than would have been required if she had to be employed direct from her then employment with the major retail store. Moreover no provision needed to be made for the payment of Income Tax on a “PAYE” basis in respect of the employment of the applicant or Ms Olsen. I find the applicant and Ms Olsen to be employees of the respondent between 5 December 1994 and 4 August 1995.
WAS THERE A VALID REASON FOR TERMINATION
Under the provisions of the Act, the respondent carries the burden of showing that at termination it had a valid reason or reasons for bringing the employment to an end summarily. In his decision in Selvachandran v Peteron Plastics Pty Ltd (1996) 62 IR 371, Northrop J describes the meaning of this phrase in the following way:
“Section 170DE(1) refers to “a valid reason, or valid reasons”, but the Act does not give a meaning to those phrases or the adjective “valid”. A reference to dictionaries shows that the word “valid” has a number of different meanings depending on the context in which it is used. In the Shorter Oxford Dictionary, the relevant meaning given is: “2. Of an argument, assertion, objection, etc; well founded and applicable, sound, defensible: Effective, having some force, pertinency, or value.” In the Macquarie Dictionary the relevant meaning is “sound, just, or well founded; a valid reason.”
In its context in s170DE(1), the adjective “valid” should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s170DE(1). At the same time the reason must be valid in the context of the employee’s capacity or conduct or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must “be applied in a practical, commonsense way to ensure that” the employer and employee are each treated fairly, see what was said by Wilcox CJ in Gibson v Bostik Pty Ltd (1995) 60 IR 1, when considering the construction and application of s170DC.”
The defence of this case by the respondent was solely based on the concept that the applicant and Ms Olsen were not employees. As I have found against the respondent on this issue it follows that the respondent then is required to prove that at 4 August 1995 it had a valid reason for the termination of the applicant and Ms Olsen. It seems that its reasons for dismissing the applicant revolves around his failure to sell sufficient homes. I am not satisfied that at 4 August 1995 this could be properly established by the respondent. For instance, there was no evidence of a review of the sales situation being carried out after six months as required by paragraph 7 of the agreement (Exhibit 3).
The evidence in this case leads me to the conclusion that there was not well founded or just grounds for the decision to terminate the employment of the applicant. There was not a valid reason to terminate the employment of the application.
SECTION 170DC: EMPLOYEE OPPORTUNITY TO RESPOND
In Perrin v Des Taylor Pty Limited (1994) 58 IR 254 at 256-7, Moore J said the following about the purpose of section 170DC:
“Its purpose is at least twofold. It is to give the employee the opportunity to demonstrate that the allegations have no foundation in fact or they should not be viewed as reflecting on the employee’s capacity. In the present case, the applicant may have been able to show that the complaints about slow delivery parts had no factual foundation or that there was an explanation for their slow delivery that did not relate to any want of effort on his behalf.
A second purpose of s170DC is that an employee with whom an allegation has been raised may be able to persuade the employer that, while the allegation is of substance, there are factors that should persuade the employer not to terminate the employment. They may be extenuating personal circumstances or they may involve undertakings about future conduct.”
Despite the fact that there was regular contact between the applicants and the Webb Brothers. There was no evidence of any opportunity being given to the applicant to respond to the suggested poor sales performance. It appears that Mr Brian Webb was convinced that he could rely on his view that the applicant was not an employee and therefore a person who could be terminated without notice or a proper hearing. This finding is based on the fact that the role played by Mr Michael Webb in the actual termination was not revealed during the evidence or in cross examination.
In my view, the respondent breached section 170DC of the Act, in that it should have given the applicant the opportunity of making representations about the level of sales he had achieved. In addition, the applicant may have wished to put ideas for increased sales in the future. In those circumstances there will be a finding against the respondent that there was a contravention of section 170DC. of the act.
REINSTATEMENT IMPRACTICABLE
Mr Robson, according to the evidence which I heard was not a totally successful sales person. He did not, in his evidence, give any outline as to how he intended to improve on his sales results if he was reinstated.
It seems likely that he had some good organisational skills which made him acceptable to the existing residents. This is demonstrated by the apparently unsolicited supportive remarks of some residents at the anniversary function. However, the respondent, did not see this as his main role at Oyster Cover Waterfront Village.
I am satisfied that I have only a limited discretion not to reinstate the applicant where it has been found that there is no valid reason for termination of his employment. (See decision of Liddell v Lemke t/a Cheryls Unisex Salon ( Full Court decision by Wilcox CJ, Keely & Gray JJ dated 15 December 1994, IR 56 page 447). However, the question of validity is to be determined by the circumstances surrounding the case. In these proceedings I am satisfied that it would be appropriate for the respondent to expect a certain level of sales from the applicant, subject to the requirement to meet the provisions of section 170DC, in relation to a failure to meet that performance criteria.
The respondent failed to put before the court any issues of a practical nature, which would prevent the reinstatement of the applicant. As well the applicant also failed to give any positive evidence that would support his claim that reinstatement is not impractical. In a case where the employee is to be placed back in a relatively unsupervised position, and subject to meeting a sales criteria, it is necessary for the applicant to put forward some evidence as to how he would address those matters in the future. The applicant has failed to do so, and having regard to these circumstances, I find it is impractical to reinstate the applicant.
COMPENSATION
The wages paid jointly to the applicants at the date of termination was $1100 per week. Up until the day of termination the applicants had the use of a car which was in lieu of wages foregone of $100 per week. I propose to assess the $100 per week as being a component which should be added to the salary of the applicant. The reason for doing that is that he was to be the external sales person and there was evidence that he travelled interstate by motor vehicle.
Accordingly the assessment I make of his wages is $600 per week in gross terms. There is clear evidence that he was unemployed for a considerable period of time and was in receipt of Social Security Benefits. I do not think this should be the criteria upon which his compensation should be based.
In Nicholson -v- Heaven & Earth Galleries Pty Ltd (1994) 1 IRCR 199, Wilcox CJ, suggested it may be appropriate to make an assessment of the period of time in which the applicant might continue in his employment, before his termination was able to be properly completed. In that case Wilcox CJ found that the particular applicant was not suited to the type of work he had done.
In Sophie Caroline Lethern v Beresfield Pty Ltd trading as Titan Ford Brookvale (unreported IRCA decision dated 3 October, 1995 No. 542/95 McILwaine JR), a similar situation arose where there was some dispute as to the number of the sales to be completed. In that case I said:
“It is essential for sales managers to put clearly to the sales persons under their control the results which they want the representatives to achieve and that failure to achieve those results will mean dismissal. Preferably, but not essentially, this should be done in writing. I am not satisfied on the evidence before me that either was properly done in this case.”
It seems to be that when Mr Brian Webb arrived on the scene he should have discussed with both of the applicants the requirements of the company for immediate improvement in sales and to put that fairly and squarely to the applicant. Further, in that case I also made the following observation , “ It may well have occurred, if the respondent has acted appropriately, that within a relatively short period of time the applicant might have been properly dismissed. I think that a period of a further two to four months may have been sufficient to enable her to demonstrate her capabilities in achieving the desired level of sales. I would be prepared to allow this period because of the difficulties I would imagine of selling cars during the Chistmas/New Year /January holiday period and taking into account her pregnancy.”
It seems to me that a period of only one to two months would be an appropriate allowance in this matter as the factors which were applicable in that case such as the New Year holiday period are not applicable here. In those circumstances I assess that within a further six weeks the respondent could have properly terminated the position held by the applicant. In the circumstances it is appropriate that there will be an award of three thousand six hundred dollars.
Finally there should be an award of compensation for the failure to give the required period of notice under Section 170DB of the act.
There will be judgment and orders accordingly.
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